When it became a legal requirement to protect tenants’ deposits in a government-approved deposit protection scheme, it was expected that the legal system would clearly establish how tenancy deposits should be handled and what procedures are required to ensure compliance. And indeed it did – or so it seemed. Since 2007 when TDP became mandatory in England and Wales, court cases have enforced against landlords who fail to protect the deposits or don’t issue the prescribed information.
What we didn’t expect was a high profile court case that re-interpreted the statute without acknowledging the spirit of the law concerning TDP. The case of Superstrike versus Rodrigues set a precedent that no one had expected; that when a fixed term tenancy ends and a statutory periodic tenancy is entered into, a new tenancy is created. As such the deposit may need to be re-protected and the prescribed information re-issued. This ruling could have a significant impact on many existing tenancies.
As a result and until any new legislation is put in place to clarify the law, landlords who have allowed tenancies to become statutory periodic since protecting the deposit (or not if the initial tenancy began prior to 6 April 2007) have the following options:
- Negotiate a new tenancy and re-protect the deposit
- Confirm the deposit is protected and re-issue the prescribed information
- Refund the deposit
- Take a risk and wait to see if the law changes
Incidentally, the NLA and its industry colleagues, the UK Association of Letting Agents, the Association of Residential Letting Agents, the British Property Foundation, the National Approved Letting Scheme, the Residential Landlords Association and the Royal Institute of Chartered Surveyors, are putting pressure on the Government to legislate in order to prevent further confusion and damage to the industry and landlord confidence.
So far, the Department for Communities and Local Government, the Government department responsible for TDP, has confirmed that is has accepted the need to legislate and clarify its original intentions in law, i.e. to specify in statute that when an AST becomes a statutory periodic tenancy a new tenancy is not created and there is no subsequent need to re-protect a deposit or re-serve the necessary prescribed information.
However, this isn’t likely to be a quick fix – indeed the judgment was made back in June of this year and new primary legislation will take some considerable time to bring into play. The Department must now impress upon the Leader of the House of Commons the necessity of working quickly to introduce this change. For this purpose the NLA, working with a coalition of industry bodies, has produced a package of evidence demonstrating the potential impact of not resolving the issue quickly.Click here to read the original article: "A strike too far: the case of Superstrike versus Rodrigues"